by Kim Glenn, Partner
With the uncertainty of federal funding, and the volatility of the stock market, our moss+ross team is monitoring the impact on our nonprofit partners as well as responding to questions about best practices during challenging times.
We know what we are experiencing is unprecedented. And we also know that major crises of the last 25 years – COVID in 2020, the Great Recession in 2009, the Dot-Com Bust of the early 2000s – have taught us that we are resilient, we can and do pivot, and it is possible to rise stronger and better. We will need to accelerate in some ways, and put the brakes on in others, but our message to our nonprofit leaders is to stay the course.
Although we do not know the full impact of the political and economic climate, giving after major economic downtowns has generally rebounded and strengthened. According to the , Chronicle of Philanthropy after the extraordinary downturn in the economy with COVID in 2020, “the stock market recovered enough that giving by year’s end had climbed nine percent when adjusted for inflation — the biggest spike in nearly a decade, according to the annual Giving USA report.”
Whether you are experiencing a decline in federal funding or hearing from donors about the volatility of the economy, our overarching recommendations to nonprofits during this time include the following:- Evaluate the impact of federal funding. In North Carolina, 36% of all nonprofits receive some form of federal funding, with human services organizations receiving the most. Take time to review how much you are receiving and what programs are being funded. What pivots do you need to make, will your strategic goals be impacted, and who will make these determinations? We recommend involving Board and staff leadership, being transparent with all key constituents, and working together to develop an understanding of the impact should funding be cut.
- Create a pro forma budget that considers “what if” scenarios. Engage your CFO, Finance Director or Treasurer to create a pro forma budget that will help you evaluate which programs and staff could be most impacted. Consider whether there is an alternative source of funding – for example, reserves that can be used during times of crisis or quasi-endowment funds that you can tap for a period of time to help bridge the gap while you evaluate options.
- Place greater emphasis on engaging your individual donors. Many donors are watching with interest and want to make sure that the services and programs they have supported through your organization continue. Focus on messaging that emphasizes program impact and long-term stability. At the same time, the volatility of the markets are causing concern. According to the Chronicle of Philanthropy, while uncertainty can dampen giving, it is important to stay engaged with your donors. Gifts that have been in the works for a long time can and do continue, and continued engagement has been shown to help maintain a similar level of giving even in downturns.
- Reach out to foundation funders and those who give through donor-advised funds. Private foundations and donors that give through donor-advised funds can be a source of interim or short-term funding to help support those organizations facing funding cuts. Some funders are considering adjusting their grant-making strategies, similar to what we saw during the pandemic. Seek counsel and advice from these funders to help create a plan for short-term funding support through a one-time investment, challenge grant, or other vehicle that your organization can use to bridge funding.
- Communicate often with your board, staff and volunteers. We are all in this together, and transparency and open, honest conversations will calm fears, create plans, and implement efforts to stay the course.
The entire moss+ross team is focused on strategies to support the work of our nonprofit partners. YOU are our mission. Please call us if we can support your organization in fulfilling its mission. |
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